The Silnas of the ABA's St. Louis Spirits still cash in on the contract that began with the merger in 1976.
By Jonathan Abrams
Times Staff Writer

July 31, 2006

Roughly once a month, the NBA cuts 31 checks to NBA teams as revenue from its multibillion-dollar national television contract.

There are only 30 NBA franchises, so who gets the extra check?

The money goes to brothers Ozzie and Dan Silna, co-owners of the long-forgotten ABA team, the Spirits of St. Louis.

Thirty years ago, Ozzie Silna, with attorney Donald Schupak, negotiated a deal that cleared the way for the ABA to merge with the NBA. It ranks as one of the best sports deals in modern times, one that has paid the Silnas about $168 million and continues to pay off.

"I would have loved to have an NBA team," said Ozzie Silna, 73, a Malibu resident and environmental activist. "But if I look at it retrospectively over what I would have gotten, versus what I've received now, then I'm a happy camper."

Part of the Silnas' deal called for them to receive one-seventh of the annual TV revenue from each of the four ABA teams entering the NBA. The deal turned out to be so lucrative that several NBA teams have tried to break it, without success.

"We honor the deal," said Donnie Walsh, the Indiana Pacers' chief executive. "I can't say we haven't met and tried to settle it. But it's the greatest deal known to man. What more can you say?"

The key line in the Silnas' TV contract that makes NBA executives cringe reads: "The right to receive such revenues shall continue for as long as the NBA or its successors continues in its existence."

In other words, the deal lasts as long as the NBA does.

Another key component is that Silna, anticipating the NBA expanding, capped the brothers' portion of shared television revenue at a maximum of 28 teams. The other NBA teams share their revenue among all 30 teams.

The Silnas' contract stands ironclad, despite occasional court challenges. Harry Weltman, former general manager of the Spirits, argued to the Supreme Court in 1991 that he was entitled to a share of the revenue to no avail.

Still, the four ABA teams now in the NBA — the Denver Nuggets, Indiana Pacers, New Jersey Nets (formerly the New York Nets) and San Antonio Spurs — have spent plenty in legal fees searching for wiggle room out of the Silnas' contract.

"I think nearly every single attorney and sports executive from those four franchises has taken a look at the deal to see if they can break it," said Gary Hunter, a former Nuggets executive. "I've yet to talk to anybody who can say it can be broken. Every year, when it came down to take a look at the budgeting process we would all just shake our heads."

Three decades ago when the Silnas struck their deal, the renegade ABA, known for its red-white-and-blue ball, three-point shots and star Julius Erving, was struggling financially.

In 1976 the ABA reached a merger deal with the NBA. The NBA agreed to take four of the six teams from the dismantling ABA. The Spirits and the Kentucky Colonels were not invited to join the league. However, the ABA owners needed to reach unanimous approval for the merger to take place.

John Y. Brown, owner of the Kentucky Colonels, quickly accepted a $3.3-million buyout as compensation. That deal was also offered to the Silnas.

But Ozzie Silna kept haggling for more, and he finally reached a deal in a swank Massachusetts hotel room. The Silnas would get $3 million, plus a share of the TV revenue from the four teams entering the NBA.

"When we accepted the arrangement, the big thing was that the NBA had television" and the ABA didn't, said Silna. "But still, the TV revenue was minuscule compared with baseball and the NFL."

Initially, the contract netted the Silnas about $300,000 a year as the NBA struggled with spotty attendance and weak TV ratings until the '80s, when Magic Johnson, Larry Bird and Michael Jordan catapulted the league to a higher profile.

As the NBA's popularity rose, so did the league's TV contract and the Silnas' cut. For the NBA's last contract, they averaged $15 million a year.

"The process never even entered our minds of how high it would get," Ozzie Silna said. "We just wanted a piece of the action."

They are due an even larger jackpot from the NBA's current contract, which began in 2002. That six-year, $4.6-billion deal with ABC/ESPN and TNT could earn them upward of $24 million annually, according to Silna.

Without having to dole out salaries or money on stadium leases, the Silnas earn more each season than most NBA teams.

Silna is quick to point out that today's NBA teams are worth hundreds of millions. Indeed, the Lakers are worth $529 million, and the lowly New Orleans Hornets are valued at $225 million, according to Forbes.

The irony is that Ozzie Silna said he never thought the Spirits would be one of the ABA teams that folded.

The Silnas, who originally earned their money as textile manufacturers, purchased the North Carolina franchise and moved it to St. Louis in 1974. The colorful team featured future NBA players Marvin Barnes, Maurice Lucas and Moses Malone and young radio announcer Bob Costas.

Attendance stagnated in the team's second year, and it soon became apparent the Spirits would not survive the impending merger. In all, the Silnas spent about $5 million on the Spirits.

In 1982, after several years of cashing TV checks, the Silnas came close to accepting a new buyout. The NBA offered them $5 million over eight years, but the Silnas countered with a demand of $8 million over five.

I didn't realize before that not only does this thing last as long as the NBA exists (that I did know), but in fact even if a league replaces them, they have to pay this family too.

Hicks

07-31-2006, 01:47 PM

If I were the league, I think I would have taken their buyout offer. It would have paid for itself eventually.

Bball

07-31-2006, 02:08 PM

The buyout was 40 million either way.... Silly NBA.

Sure, it would've meant a little more belt tightening to get it done in the shorter time frame but it would've been worth it.

-Bball

Frank Slade

07-31-2006, 02:17 PM

I assume in the event of their death the funds will still go thier estate ?

btowncolt

07-31-2006, 02:22 PM

The buyout was 40 million either way.... Silly NBA.

Sure, it would've meant a little more belt tightening to get it done in the shorter time frame but it would've been worth it.

-Bball

The way it reads to me is that they were only demanding 8 million total. It was just supposed to be spread out over 5 years (which would make far more sense in 1982 than 40 million total either way). The NBA was only offering 5 million total over 8.

Both offers look silly to turn down from the NBA's point of view 24 years later.

Bball

07-31-2006, 03:13 PM

The way it reads to me is that they were only demanding 8 million total. It was just supposed to be spread out over 5 years (which would make far more sense in 1982 than 40 million total either way). The NBA was only offering 5 million total over 8.

Both offers look silly to turn down from the NBA's point of view 24 years later.

I believe you are correct... I read it quickly. Wow... STUPID NBA.

-Bball

Knucklehead Warrior

07-31-2006, 03:13 PM

Yeah, this seems silly enough now, but back then they were just negotiating for a few extra bucks.
Magic Johnson's last? contract was $20 million for 20 years and everybody gasped because at the time no one was making a mil/yr.

Bball

07-31-2006, 03:17 PM

BTW... I still have a hard time believing that a deal this one-sided is that iron-clad in this day and age.

-Bball

Hicks

07-31-2006, 03:23 PM

BTW... I still have a hard time believing that a deal this one-sided is that iron-clad in this day and age.

-Bball

You have a hard time believing that grass is green. :tongue:

travmil

07-31-2006, 03:33 PM

Whoever was doing the lawyering for the NBA when this deal was signed better have been fired by now.

Yes, lawyering IS a word, thank you.

Knucklehead Warrior

07-31-2006, 03:53 PM

BTW... I still have a hard time believing that a deal this one-sided is that iron-clad in this day and age.
-Bball

Whoever was doing the lawyering for the NBA when this deal was signed better have been fired by now.

Nobody held a gun to anybody's head. An agreement was made. The brothers took a risk, the nba accepted the terms. The Silnas had something the nba wanted and that was the price. Were they stupid? In retrospect yeah. And if the nba hadn't become successful, then the Silnas might have looked stupid.

Now, what should have happened is that the deal should have had a cap on it. THAT is what is stupid here, but then the Silnas could have just as easily negotiated that there be a minimum too. The nba was probably laughing at the time. :laugh: thinking they'd taken them.

ABADays

07-31-2006, 07:17 PM

Am I wrong, but couldn't this deal be ended by putting a team in St. Louis. For whatever reason I seem to remember that.

Sad . . . wasn't Stern the counsel for the NBA then :D

Roaming Gnome

07-31-2006, 07:45 PM

Am I wrong, but couldn't this deal be ended by putting a team in St. Louis. For whatever reason I seem to remember that.

Sad . . . wasn't Stern the counsel for the NBA then :D

Yes, David Stern joined the NBA's legal council in 1978 and was made president of the NBA's legal council in 1980.

Sounds like the Silna's are Sterns own chickens comming home to roost!

Peck

07-31-2006, 08:07 PM

Yes, David Stern joined the NBA's legal council in 1978 and was made president of the NBA's legal council in 1980.

Sounds like the Silna's are Sterns own chickens comming home to roost!

The deal was made in 76 so that was two years before Stern joined.

able

07-31-2006, 08:21 PM

Stern was external lawyer for the NBA where it involved the merger, that is the main reason he was later hired by the NBA

Peck

07-31-2006, 09:11 PM

Stern was external lawyer for the NBA where it involved the merger, that is the main reason he was later hired by the NBA

Your right, I forgot about that. He was outside council.:blush:

Thanks Able.

Roaming Gnome

07-31-2006, 09:20 PM

The deal was made in 76 so that was two years before Stern joined.

Eventhough I didn't know Stern was Outside Council in '76, I was really refering to the NBA's turning down the Silna's term for a buyout in 1982 as "Stern's Folly". Stern, most likely...had the influence to make that buyout a reallity.

OTD

07-31-2006, 09:30 PM

I think you had better check your statment about Magic Johnson, Larry Bird was very far behind him.

gilpdawg

07-31-2006, 10:37 PM

Yep, according to Loose Balls, Stern was one of the main architects of the merger, along with Angelos Drossos, who owned the Spurs, and I can't remember who else on the NBA side, but Drossos and whoever owned the Nets were the main guys on the ABA side. On a side note, the Pacers almost didn't make it through those last couple of years, as the owners at the time got involved in the WHA and went broke, and the Pacers were sold at mid-season, or they would have folded. *shudder*

GO!!!!!

07-31-2006, 10:43 PM

Congrats on the Silna's

still think the NBA should just bear it... heck this whole GM Empolyee for Life is worse for GM then the 31st NBA team ever will be

ABADays

08-01-2006, 01:05 PM

Yep, according to Loose Balls, Stern was one of the main architects of the merger, along with Angelos Drossos, who owned the Spurs, and I can't remember who else on the NBA side, but Drossos and whoever owned the Nets were the main guys on the ABA side. On a side note, the Pacers almost didn't make it through those last couple of years, as the owners at the time got involved in the WHA and went broke, and the Pacers were sold at mid-season, or they would have folded. *shudder*

Was that Nelson Skalbania?

Roaming Gnome

08-02-2006, 04:29 PM

I wonder if the Indy Star does cruise this forum? It's kind of interesting that this story ended up in Today's Rats Sports section.

Yeah, I know they probably spotted it on the times, but in my mind I'm going to say Kravitz spotted it here while shopping for content and passed it on to his editors... ;)

Kegboy

08-02-2006, 04:36 PM

I assume in the event of their death the funds will still go thier estate ?